Head in the BitCloud : A Discussion on the Copyrightability and Ownership Rights in Generative Digital Art and Non-Fungible Tokens

This Comment discusses three major copyright questions raised by non-fungible tokens (NFTs) creation and distribution in the digital art world. First, how does employing AI in the creation of generative and derivative digital art and NFTs affect the copyright requirements of authorship? Second, who is the rightful owner of an NFT image pre- and post-purchase? Finally, how does the first sale doctrine apply to NFT image purchases and are those protections enough to resolve future copyright-specific NFT claims? In Part I, an introductory example is laid out to showcase the complex issues generative and derivative digital art and NFT images create within copyright law. Part II provides a foundational knowledge of key topics. This section explains what blockchain technology, smart contracts, and cryptocurrency are, and how they relate to the creation and sale of NFTs and NFT images. It goes on to address key NFT concepts such as on-chain and off-chain transactions, while outlining why there is real value in purchasing NFT images. This section concludes by discussing the future application of NFTs to other professional industries. Part III discusses how copyright law and NFTs interact. It explores the arguments on both sides of the copyright debate discussing AI-generated creative works and the authorship requirement. It then determines that most original and generated NFT images should be copyrightable because of the amount of creativity and planning that goes into creating the NFT projects and the AI that generates these NFT images. This portion also discusses who the rightful owner should be when generative NFT image projects spawn derivative NFT images, determining the artist who created the derivative NFT project is likely the default owner of the resulting works. Part IV then turns to the question of how the current first sale doctrine applies to NFT images. It briefly discusses how past legislative amendments have failed to address default rights in digital works while arguing the current doctrine does not adequately protect NFT image artists or purchasers. It then discusses how amending the first sale doctrine is the most efficient way to ensure an NFT image’s copyright is not diluted, while subsequently protecting both NFT artists and purchasers. It proposes an amendment to the first sale doctrine that would grant NFT image purchasers specific default rights in the NFT images they are purchasing. It distinguishes NFT images from former digital goods seeking first sale protection by addressing long-held concerns Congress has wrestled with when discussing digital asset ownership in the past. This section focuses on how the transparency and immutability of blockchain and smart contracts has nullified the issues of increased piracy risk and former inadequate asset tracking protocols. Finally, Part V summarizes why this type of amendment would be the best way to ensure NFTs continue providing value to the artistic community without diluting the creative rights they were created to track and protect